WEC Energy Group, Inc.

Good afternoon and welcome to WEC Energy Group's conference call for third quarter 2020 results. This call is being recorded for rebroadcast and all participants are in a listen-only mode at this time. Before the conference call begins, I remind you that all statements in the presentation, other than historical facts, are forward-looking statements that involve risks and uncertainties that are subject to change at any time. Such statements are based on management's expectations at the time they are made. In addition to the assumptions and other factors referred to in connection with the statements, factors described in WEC Energy Group's latest form 10-K and subsequent reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those contemplated. During the discussions, referenced earnings per share will be based on diluted earnings per share unless otherwise noted. After the presentation, the conference will be open to analysts for questions and answers. In conjunction with this call, a package of detailed financial information is posted at wecenergygroup.com. A replay will be available approximately two hours after the conclusion of this call. And now, it's my pleasure to introduce Gail Klapa, Executive Chairman of WEC Energy Group.

Live from the heartland, good afternoon, everyone. Thank you for joining us today as we review our results for the third quarter of 2020. First, I'd like to introduce the members of our management team who are on the call with me today. We have Kevin Fletcher, our President and CEO, Scott Lauber, our Chief Operating Officer, Shao Liu, our Chief Financial Officer, and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations. As you saw from our news release this morning, we reported third quarter 2020 earnings of 84 cents a share. Our solid results were driven by a rebound in economic activity in the region, warmer summer temperatures, and efficiency gains throughout our operations. Scott and Shaw will provide you with more details on the quarter in just a few minutes, and Kevin will cover our operational progress. But first, I'd like to discuss our new five-year capital plan. our roadmap for the next five years of capital investment. So for the period 2021 through 2025, we expect to invest $16.1 billion. It's the largest five-year capital plan in our history, an increase of $1.1 billion or 7.3% above our previous five-year plan. We're calling this roadmap our ESG Progress Plan because we're investing the $16.1 billion for efficiency, sustainability, and growth. As you would expect, our ESG progress plan includes a significant investment in renewables. We're allocating nearly $2 billion to regulated renewables that will serve our Wisconsin utility customers. In addition to the projects we have underway, we plan to bring 800 megawatts of solar, 100 megawatts of wind, and 600 megawatts of battery storage into our fleet. The data show that battery storage has now become a cost-effective option for us. Our plan also calls for modernizing our gas generation fleet. To improve efficiency, we expect to retire 400 megawatts of older natural gas fueled capacity. In addition, we plan to purchase 200 megawatts of capacity in the West Riverside Energy Center. That's a new combined cycle natural gas plant recently completed by Alliant Energy here in Wisconsin. And finally, on the natural gas generation front, we plan to build an additional 100 megawatts of capacity using reciprocating internal combustion engines, or as we call them, rice units. As we've already seen in the Upper Peninsula of Michigan, rice generation is flexible, reliable, and scalable. Now, all of these efforts should allow us to retire 1,400 megawatts of our coal generation by 2025. The benefits of our ESG progress plan are very clear. We'll cut CO2 emissions, maintain superior reliability, lower our operating costs, and grow our investment in the future of energy. Now, as you may recall, we've already set aggressive targets to reduce carbon dioxide emissions by 70% below 2005 levels by the year 2030. We're also working to make our generation fleet net carbon neutral by 2050. With the plan, ladies and gentlemen, that we just described to you, we're able to announce today a new near-term CO2 reduction target. We're aiming to lower emissions by 55% below 2005 levels in just the next five years by the end of 2025. In addition, for the longer term, this generation plan will deliver significant economic benefits for our customers. Compared to the status quo, We expect customer savings of approximately $1 billion over the next 20 years. There are a number of other important elements in our ESG progress plan, and we'll be happy to share all the details with you at the upcoming EEI conference. But in summary, our updated capital plan should grow our asset base by 7% annually over the five-year period with no need for additional equity. And the plan fully supports our projection of long-term earnings growth at a rate of 5 to 7% a year. Now let's turn for a moment to the economy and a quick look at conditions here in Wisconsin. As you know, we provide energy to a broad range of industrial and commercial customers. Many of them produce and deliver essential services. During the pandemic, we've seen particular strength in paper, food processing, packaging, plastics manufacturing, and electronic controls. and there's clearly been a strong rebound in the labor market over the past few months. The latest available data show Wisconsin's unemployment rate down to 5.4%, and of course that's well below the national average. I would add that new developments are creating even more opportunity, particularly in the southeastern corridor of the state. For example, Kamatsu recently broke ground on a state-of-the-art manufacturing and global mining campus serving as its Milwaukee area headquarters. Our company sold 43 acres of land to Komatsu for this development, which is taking place in what's known as Milwaukee's Harbor District. Komatsu expects to invest approximately $285 million in the project. When complete, it will include engineering and robotics labs, a large office complex, a customer center, a modern manufacturing facility, and more with the potential to employ more than 1,000 people. Construction of the campus is expected to be complete in 2022. And literally just a few days ago, Amazon opened a 2.5 million square foot distribution center in Oak Creek. That's just south of Milwaukee. This four-story center is equipped with the latest in robotics for packing and shipping. And at full strength, Amazon expects to employ 1,500 full-time workers at its facilities. And of course, I know all of you are interested in the Foxconn development in Racine County. As we speak, construction work continues on a smart manufacturing facility and a network operations center that will support high-performance computing. Groundbreaking on the high-tech campus took place just a little more than two years ago. Since that time, Foxconn's plans have clearly evolved. The company is now assessing a much more diverse product line than originally envisioned. Now, because of these changes, The state of Wisconsin is asking to revise its tax incentive contract with Foxconn, and the head of the state's economic development agency has said the door is wide open to support Foxconn's business expansion in the state. So all things considered, with a resilient economy and major developments in the pipeline, we remain optimistic about our long-term sales growth. And with that, we'll turn it over to Scott, and he will chat about our sales for the third quarter of this year. Scott, all yours.

Thank you, Gail. We continue to see customer growth across our system. At the end of the third quarter, our utilities were serving approximately 11,000 more electric and 32,000 more natural gas customers compared to a year ago. Retail electric and natural gas sales volume are showing on a comparative basis on page 17 and 18 of the earnings package. As you recall, we adjusted our forecast at the start of the pandemic. The results in the third quarter were better than our adjusted forecast across all customer classes. For example, residential sales of electricity were up 7.1% from the third quarter of 2019, and on a weather-normal basis, were up 4.2%. That's a 1.6% better than our forecast. Small commercial and industrial electric sales were down 2.5% since the last year's third quarter. And on a weather normal basis, we're down 3.3%. This was six-tenths of 1% better than our forecast. Meanwhile, large commercial and industrial sales, excluding the iron ore one, were down 5.4% from the third quarter of 2019 on both an actual and weather normal basis. This reflects a rebound in economic activity in Wisconsin and was 4.3% better than our forecast. Overall, retail deliveries of electricity were down by three-tenths of 1% from the third quarter of 2019. And on a weather-normal basis, we're down 1.5%, tracking well ahead of our forecast. And looking at the sales trend on page 17 of the packet, we continue to see favorable progression towards normal demand in the third quarter. In fact, we're very pleased with the preliminary sales results we've seen for October. Of course, we're watching economic indicators, as always, and we are prepared to respond if the level of recovery drops back to what we saw earlier this year. I also have a few updates on the wind projects in our infrastructure segment. Construction on the Blooming Grove and Tatanka Ridge projects is on schedule. Blooming Grove should be completed by the end of this year. For Tatanka Ridge, we expect commercial operation in the first quarter of 2021. And turning to another of our projects, construction on the Thunderhead Wind Energy Center in Nebraska is nearly complete. However, as we reported last quarter, there will be a delay in the in-service date. This delay has been caused by a permit issue related to a substation being built by Nebraska Public Power District. We are working with all parties to complete the work and bring Thunderhead to commercial operation in the latter half of 2021. I would point out that we have a number of upsides in the plan. So this delay should not change the trajectory of our earnings growth for 2021. And now I'll turn things over to Kevin to give an update on utility operations.